If you are in the early stages of being a venture capital investor you will probably see hundreds of business opportunities and ideas every month. However, you will also feel amazed an entrepreneur wanting to build a new company when you know that you will need proper funds for your business irrespective of its type and look for different sources of funding your business. Well, you need not be worried as there are a lot of ways in which you can find the desired financial respite.
Open access funding
You will need to support your business thick and fast so as to ensure that it runs properly and reaches it goal as desired within the pre-determined time. You will find a lot of sources worldwide for open access funding that are listed by country with authentic links to reach to the source and the funding policy pages. Based on the information available that is updated regularly on these pages you will come to know of the different open access funding types that you can choose from.
Depending on the different annotations, the different types of open access funding include APC funding for grant application budget. The agreements of such funding with the institution may make you even a member of their specific programs for your added benefits. If you are affiliated with these programs, you may get discounted APCs.
However, right at the outset, you must know that the first and perhaps the best place to raise fund for your business growth is your customers in most of the cases. This is why.
As a business owner, you will always love to make your business profitable and use it in the best possible way to make money. All those entrepreneurs who start their businesses for a living usually have their goal set and design a product that will fit the market as well as the demand of their customers to sell well and as fast as possible.
Given the present market scenario aspiring to be an entrepreneur and start a business of your own is perhaps the best way and is also an exceptionally popular way these days. However, you may be pitched with the most common problem that most entrepreneurs face with: lack of customers. This is due to the fact that they do not have a product or service that is wanted by the mass.
Therefore, at the end of the day business will boil down to one primary equation and that is to create a product or service that your customers will like. They will be willing to pay you for it a sum that is ideally more than what it took to produce the product or the cost of the service to perform.
This is often much easier said than done of course but it is a universal fact that all businesses start and also ends with the customer. It is the most useful takeaway because the best part about is that you do not have to give up any equity in your business for this and at the same time you do not have to pay down a loan taken from Liberty Lending USA or any other sources as well.
Add to that you will be able to build a loyal customer base as your business grows and that will reward you even more if you are a startup.
Apart from this, there are also a few other sources to fund your business and here is a brief list of these sources along with the review of each. You are suggested to know the pros and cons of each.
Venture capital investment, on the other hand, is always very expensive and given in almost every scenario when any entrepreneur secures to raise capital often end up sharing large equity and even giving up the complete ownership of the company in exchange of such funding. Apart from that:
- Venture capital will come with strict conditions and terms that will include but not limit voting rights, the right to maintain ownership or pro-rata rights, one to two board seats, clawbacks and much more.
- Sometimes, opting for an investment from a VC may the best capital you may receive. This is because you will get not only the resources but the knowledge of the investor as well on the table. Venture capitalists are known to overcome challenges that may come to businesses to ensure their growth potential.
However, the unfortunate news is that securing venture capital funding may be incredibly hard given the current trends in the industry landscape.
Debt financing is one of the oldest and perhaps the safest and cheapest way to fund your business than equity. Therefore, going to the bank and securing it should be the first and foremost option, provided you meet with the set parameters and eligibility requirements.
However, the banks here to have tightened their loaning practices especially after the sub-prime mortgage crisis in 2008. If you are a small business owner then you should generally explore two given options for debt financing:
- SBA loans and
- Traditional bank loans.
However, in both of these cases, you will need cash or assets upfront along with a solid financial history and credit score to get such loans. You simply cannot show up at the bank with your exceptional business idea written down on a piece of paper and expect to get any of these loans.
SBA loans are usually provided by the government and may allow you to borrow up to $5 million. These loans are a great source for you for business funding if you are unable to secure funding from any traditional bank. However, it comes with governmental bureaucracy added to it and you will need to personally guarantee for the loan with collateral security that you may lose in case you default on your payments.
Traditional bank loans, on the other hand, are granted to those businesses only that pass through the stringent eligibility parameters and if your business is to their liking.